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Mon Mar 28, 2016, 10:44 AM

Ultra Low Interest Rates A Threat To Social Security [View all]


In perhaps 2-3 years new contributions to the Social Security trust fund will end and withdrawals from it will begin. The longevity of SS trust fund depends in large part on how its growth from interest exceeds its net outflow to existing SS recipients... the bigger the interest return, the longer the fund will last. But there is no floor on the interest rates the fund gets and the average interest rate for the entire fund in 2000 was 6.9%. Today it's 3.4% https://www.ssa.gov/oact/progdata/annualinterestrates.html

The average for the entire fund is being brought down by the ultra low interest rates set by the FED which brings down the rate US Treasuries get... and in this case the special treasuries the government issues to the SS fund. The formula was created by Congress in 1960 https://www.ssa.gov/oact/progdata/intrateformula.html and certainly Congress can change it.

Here are the rates any new money has been getting when it enters the fund: https://www.ssa.gov/oact/progdata/newIssueRates.html

In 2012 the average annual average interest for new monies was only 1.458% when according to http://www.usinflationcalculator.com/inflation/historical-inflation-rates/ the inflation rate was 2.1%!

SS was losing ground.

In 2013 the new monies were getting 1.9% and the inflation rate was 1.5%... a pathetic .4%.

WHY AREN'T THE DEFENDERS OF SOCIAL SECURITY RAISING THE ALARM BELLS?


Workers are involuntary taxed to provide mainly for their retirements and yet that goal is being undermined by politicians OF BOTH PARTIES. The SS trust fund has been a cash cow for politicians for too long. It MUST be treated with respect. There must be a floor beneath which the interest can not fall. I believe that should be at least 4%.

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eniwetok Mar 2016 OP
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